A detailed view of the NFL shield logo on the field during a preseason game between the Los Angeles Rams and the Houston Texans at NRG Stadium in Houston on Aug. 24, 2024.
Ric Tapia | Getty Images Sport | Getty Images
Sports team owners benefiting from soaring team values are also facing new pressure from two of the oldest certainties in American wealth: death and taxes.
With the average age of team owners rising, and team values skyrocketing into the billions, owners and leagues are increasingly focused on how to ensure smooth ownership transitions to the next generation of buyers. While today’s owners have highly sophisticated tax and succession plans, even the best plans can blow up over family disputes or unexpected tax changes.
“The people who bought sports teams a long time ago have now found that a large portion, if not a vast majority, of their long-term estate is now the value of the team,” said Stephen Amdur, co-leader of mergers and acquisitions and private equity practices at Pillsbury Winthrop Shaw Pittman, who advises many billionaire team owners. “They’re thinking a lot about who is going to hold it for the next generation and what they’re going to do with it.”
Succession and taxes have become especially important in the National Football League, where the average age of team owners is now over 72 and team values are all surging. The average NFL team is now worth $6.49 billion, and no team is valued at less than $5.25 billion, according to CNBC’s Official 2024 NFL Team Valuations.
NFL owners face one of two painful choices: They can sell the team while they’re alive, which can create massive capital gains tax bills, or they can pass the team to their families, which can trigger estate taxes or prolonged family battles for control.
Former Denver Broncos owner Pat Bowlen created a detailed succession and tax plan for the team a decade before his death in 2019. Yet a bitter dispute among family members, both before and after he died, led the team to be sold in 2022 to Walmart heir Rob Walton for $4.65 billion.
Then-owner Bud Adams of the Tennessee Titans signs autographs during a preseason game against the Minnesota Vikings at LP Field on August 13, 2011 in Nashville, Tennessee.
Grant Halverson | Getty Images
Tennessee Titans founder Bud Adams, who died in October 2013, had divided ownership of the team among three branches of his family, which he thought would keep the peace. Instead, the split created a highly public battle over control, leading to an eventual deal within the family. Amy Adams Strunk, Bud’s daughter, is now controlling owner of the team.
Longtime New Orleans Saints owner Tom Benson touched off years of litigation when he removed his daughter and two grandchildren from his estate and passed ownership of the NFL team and the National Basketball Association’s New Orleans Pelicans to his wife Gayle when he died in 2018. She still maintains control of the Saints.
Then-New Orleans Saints owner Tom Benson and his wife Gayle before a game at the Mercedes-Benz Superdome on August 26, 2016 in New Orleans, Louisiana.
Jonathan Bachman | Getty Images
And perhaps the most poignant cautionary tale in the NFL is the legendary Miami Dolphins owner Joe Robbie, who left the team to his wife and nine children at the time of his death in 1990. A family feud and estate taxes of more than $45 million forced the family to sell a majority of the team in 1994.
Under current U.S. tax law, estates over $13.6 million for individuals or $27.2 million for couples are subject to a tax of 40%. Since teams in the NFL and NBA are now worth billions, all team owners could potentially be subject to hundreds of millions of dollars in taxes without proper planning.
Another wrinkle: It’s unclear whether the estate tax rates would change in 2025, when the current levels are set to expire. So owners have to be planning for the potential for more punitive estate taxes in the coming years.
Trust and estate attorneys say today’s team owners have a much broader array of tools at their disposal to minimize the tax impact of succession. One of the most popular is the family limited partnership, which makes family members minority stakeholders and leaves the primary owner, as the general partner, with control. By dividing up ownership, the partnership can lower the value of assets (and therefore of the taxable estate) of the general partner.
Owners can also split ownership among family members through individual trusts, as Chicago Bears owner George “Papa Bear” Halas Sr. did with his 13 grandchildren. They can also transfer an interest in the team into an irrevocable trust through a partnership or an LLC.
Chicago Bears coach George Halas watches his team play the Los Angeles Rams in the Coliseum on Nov. 2, 1958.
Bettmann | Getty Images
“Owners are spending more time on the front end thinking about long-term estate planning to ensure as tax-efficient an outcome as possible,” Amdur said.
That’s assuming the team stays in the family, of course. While owners often hope to pass their passion and financial commitment to a team on to their children, the next generations often have different interests or financial goals, which could mean offloading some team ownership.
And there’s now a fresh pool of prospective buyers.
The NFL last week voted to allow select private equity firms to buy minority stakes in teams, giving owners and their families a chance to draw down cash that they could then reinvest in their teams or invest in nonsports assets to better diversify – all while keeping control.
“I think it’s an appropriate thing to give the teams that liquidity to reinvest in the game and to their teams,” NFL Commissioner Roger Goodell said in making the announcement.
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